Paper
Meeting the Demand for Microfinance in the West Bank and Gaza
Assessing the Palestinian microfinance sector: obstacles and recommendations for reforms
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37 pages
This paper discusses an assessment of the Palestinian microfinance sector done by CGAP. The paper highlights the existing environment of microfinance including:
- The demand for microfinance services in the West Bank and Gaza;
- An overview of Palestinian microfinance sector:
- Number of MFIs operating in the region;
- Adequacy of management information systems;
- Types of financial services provided to the poor.
- The extent of dependence on donor funding for microfinance;
The paper mentions the legal forms currently available for engaging in microfinance:
- NGO;
- Cooperatives;
- For profit company;
- Nonprofit company;
- Banks;
- Specialized lending institutions and other finance companies.
The paper also describes the legal and regulatory issues pertaining to microfinance highlighting:
- The unlikely expansion of NGO operations as they are:
- Not entitled to raise equity from investors;
- Required to get their legal documents signed by the chairman, limiting efficient operations in multiple locations;
- Regulated by MOI which is not an appropriate body to regulate financial institutions.
- Lack of appropriate regulator for:
- MFIs doing on-lending business;
- Savings and credit cooperatives.
- Disadvantages for a for-profit MFI with respect to tax treatment.
The paper provides recommendations to donors and government officials on the following areas:
- Capacity building;
- Infrastructure supporting microfinance;
- Funding;
- Regulatory and policy framework for financial institutions providing microfinance services;
- Government policy towards poor Palestinians who are not ready to be consumers of conventional microfinance services.
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